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. Last Updated: 07/27/2016

Kremlin Snubs Foreign Yukos Investors

Yukos investors with a combined $3 trillion under management, including Deka Investment and Janus Capital Group, got no reply to a request to meet with President Vladimir Putin and instead were passed on to the stock market's regulator.

Deka, Germany's second-biggest mutual fund company, Janus and 10 other investment funds wrote to Putin on June 30 to say investor confidence in Russia is suffering from tax and criminal probes at Yukos and asked for a meeting to discuss their concern. The funds held at the time about 5 percent of Yukos.

The letter was re-sent to Putin on July 5 after the Kremlin mailroom refused to deliver it to the administration because it lacked a handwritten signature, said Ivan Mazalov, who helps manage $600 million at Prosperity Capital Management in Moscow and sent the original letter to Putin.

The second letter was forwarded to the government on July 9. A month later, the government sent it to the market watchdog.

"It is frustrating that there was no direct comment" from the Kremlin, said Ivan Mazalov, who helps manage $600 million at Prosperity Capital Management and sent the letter to Putin.

Yukos may go bankrupt as it struggles to pay a $3.4 billion tax bill that the company calls politically motivated. Putin, who is seen by investors as the one person who can resolve the battle between the state and Yukos, has not spoken on the company's fate in two months.

A Kremlin spokesman said the letter was sent to the regulator because it is best placed to deal with the matter, not president Putin.

Vladislav Streltsov, deputy chairman of the Financial Market Service, met with representatives from Prosperity Capital and Atria Advisors on Tuesday night, said Olga Kudinova, a spokeswoman for the market regulator. Chairman Oleg Vyugin was out of the office and not available, she said.

The Financial Market Service "received the letter from the government and were asked to look it over and give an answer to investors," Kudinova said.

The RTS index has fallen 29 percent since April 12, wiping out $54 billion of value, after the Justice Ministry said it would seize and sell Yukos' largest oil unit, raising concern about asset stripping and government interference in the former Soviet economy. The drop comes as oil prices reach record highs. Oil stocks account for about 60 percent of the RTS index.

Yukos shares have declined 52 percent since investors sent the letter on June 30, slashing more than $5.5 billion from the company's market value. The shares have lost 77 percent of their value since reaching a high on Oct. 9., less than three weeks before the arrest of former Yukos CEO Mikhail Khodorkovsky..

Putin met with executives from banks such as Morgan Stanley, Citigroup and Goldman Sachs in the Kremlin on Oct. 30, the same day that Russia impounded a 44 percent stake in Yukos, actions that sent the MICEX index into its biggest decline in four years.

Putin promised the executives the government would end trading restrictions that prevent foreigners from buying Russian shares of Gazprom. He did not mention the fate of Yukos to executives, said Chris Weafer, chief strategist at Alfa Bank.

The government now is making no promises on Gazprom liberalization and investigations and court cases are still under way with Yukos, so Putin may not benefit now from a meeting with investors, said Michael Heath, an analyst at Aton Capital Group.

"Putin isn't snubbing them," Heath said.

"He can't give them anything at this point, and that being the case, it's best not to chat."